Non-payment by mortgagors and currency scarcity threaten Burundi financial stability

On Wednesday 25 January 2017, Roger Guy Gyslain Ntwengeye, Head of the financial Stability Service in Burundi Central Bank-BRB, has presented a report about the financial situation of the country from 2015 to date. The report mentions different threats to financial stability, mainly the non-payment by mortgagors and lack of currencies.

Roger Guy Gyslain Ntwengeye, Head of Financial Stability Service in Central Bank: “The non-payment rate in BRB is 23 %”

Roger Guy Gyslain Ntwengeye says the first threat to financial stability is the non-payment by bank debtors because of the 2015 political crisis. “The trade was almost impossible because of the prevalence of insecurity in the country since 2015.Thus, bank debtors could not get money to pay back », says Ntwengeye.

He also says the non-payment rate in BRB is 23 % whereas the normal rate is at least estimated at 5 %.

However, Tharcisse Rutumo, BCB bank Director General, says not all sectors violate credit terms but some of them. He has also proposed a resolution to non- payment: “The mortgage has zero value in Burundian banks and measures must be taken to improve the mortgage guarantees”, he says.

Balthazar Nganikiye, an official in the Central Bank, says the realization of mortgage guarantees is almost impossible.” The central Bank plans to set up guarantee funds to solve the non-payment problem”, he says.

The second threat to financial stability is the lack of currencies which is also due to the crisis. “Since the beginning of the 2015 crisis, the foreign aid has decreased, which has affected the currency stock.” The crisis has also affected tourism which was an important source of currencies”, says Ntwengeye.

He also says another cause of lack of currencies in the country is the decrease of coffee price at the world market: “From 2015 to date, there has been mass production of coffee in different countries what caused the price reduction at the international market.”

The head of Financial Stability Service in Burundi Central Bank (BRB) says the bank has decided that all Burundian exporters must channel their money through the Central Bank to solve the problem of currency scarcity in the country.